It seems that $17 billion a year in MRI equipment just isn’t enough to satiate GE Healthcare.
The massive Fairfield, Conn.-based conglomerate is moving into a new line of business, shifting away from large equipment to a line of about 50 smaller — and much cheaper — medical devices.
Last week, the company announced details of its “Healthymagination” program, a $3 billion initiative (complete with flashy website) to develop products and service innovations over the next six years. The goal is to lower costs and increase access to quality healthcare by 15 percent.
CEO Jeffrey Immelt told the New York Times last week that “the high end in health care is never going to go away. But this will make us broader in terms of price points and offerings.”
It will also reduce their exposure to the water-logged capital equipment market. GE’s healthcare division posted a 9 percent drop in sales and a 22 percent profit decline in the first quarter of 2009. Not a comforting thought for the firm, when you consider that the division is its second-largest producer (behind the aviation segment).
GE’s new medical products line includes a handheld ultrasound machine called Venue 40, designed to provide real-time rapid diagnostics for bed-side use in hospitals that the company says will be 20 percent less expensive than current solutions. Other products include an RFID-based system to track hospital equipment and a “lullaby warmer,” an incubator for use in developing countries.
The company will also use its media arm to educate consumers. Its NBC Universal subsidiary will expand its coverage of healthcare-related issues and MSNBC will launch a daily program on health information.
The question is whether GE’s big bet on smaller products will be enough to overcome the pressures it will face as the capital equipment market dries up. And will the intrusion of GE into the wheelhouse of smaller medical device companies create a vortex, or be the rising tide that lifts all boats?
When GE jumped headfirst into the patient monitoring business a month back, MassDevice asked BL Healthcare CEO Michael Mathur if he was worried about the conglomerates entering his market space. BL Healthcare makes a product that the GE/Intel collaboration could wind up competing against.
“Its a good thing for the industry,” Mathur said, because it validated the market.